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National productivity plans

  • All nations need some form of productivity plan which outlines the broad thrusts their government intends to make to improve the well-being of the maximum number of its citizens – but most do not have such a plan, and the few that do don’t let their citizens know much about it

  • Cynics ask ‘why bother?’

  • Governments invariably get things wrong when they try to grow businesses – ‘most ministers have never run anything and couldn’t even run a whelk stall’

  • But there’s much that only governments can do to encourage and support private sector growth – one only has to look at the stellar results obtained by China, Japan and Singapore and the significant role their governments played

  • So where are we now?

  • According to The Times: “There’s no discernible moves to rebalance G7 economies towards higher added-value industries offering further GDP and prosperity growth”

  • In developed markets, stability and then more growth was sought largely via QE (Quantitative Easing) and ZIRPs (Zero Interest Rate Policies)

  • But now there’s few exciting national projects in the pipeline that address national productivity needs and ‘get pulses racing’:

    • In the UK, an exception has been the concept of a Northern Powerhouse being created in the North of England, merging Manchester and Liverpool into one mega-city with greatly improved physical and digital connectivity, and possibly extending this across the Pennines to include Leeds through to Hull – whether this will eventually materialise is another matter

    • There’s also plenty of austerity programmes ongoing but cost cutting of waste and wasteful activities is a limited exercise – once completed, those gains cannot be repeated

  • The fact is that all governments need a long term plan for growth – and one they publish so electorates not only know what to expect but also can enthuse about

National productivity measures

There are three measures of national productivity on offer from the UK’s ONS – Office for National Statistics Output per hour worked – the most popular measure: Reflects the international differences in hours worked, holiday entitlements and the flexibility of the labour market including part-time and other alternative work patterns More relevant to time than …

NHI – National Happiness Index

Jeremy Bentham, the 18th century UK economist said: “Government action should make the most people happiest” Bhutan don’t even bother to measure their GDP, preferring to use GNH – Gross National Happiness – as its measure of national well-being Why? If people are happy, they tend to spend more which enlarges national GDP pies They …

NKI – National Knowledge Index

A good NKI would show whether a nation had a competitive edge with its knowledge resources and whether further investment was needed in education, R&D or intellectual property legislation, say  However, as with NHIs, there are few useful NKIs available  An example is the one used by India               …

Action ongoing

Governments don’t determine most of national productivity levels – business managers do However, governments can do many things to help those managers, as follows:                  

Action needed – Overall

1. Expand the new national productivity centre – TPI: Clearly, all governments should take national productivity improvement very seriously – the potential benefits are £300 billion per annum for the UK alone! Each NPC should be independently funded so it cannot be swayed for any party political reasons – and it should be staffed by …

Action needed – Private sector

Establish more clusters: Clusters are ‘geographically proximate groups of interconnected companies, suppliers, service providers and associated institutions in a particular field’ – they need a sizeable local population, nearby universities and research establishments, some suppliers and customers already there, and cheap and fast transport Clusters enable cities to be more productive than towns, and mega-cities …

Action needed – Public sector

All governments must cut their cloth to what their public can afford – basic guidelines for their actions should be: Ration services to only those the public deem to be essential Target sector-wide improvements of 20% or more, not 1 to 2% Focus on less waste before less service Invest more to improve ‘core’ infrastructure, …

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